Rupee gains 47 paise as record FCNR inflows boost forex liquidity
The Indian Rupee strengthened against the US dollar due to record foreign-currency inflows from FCNR(B) deposits. These inflows have bolstered the Reserve Bank of India's liquidity position, helping the currency withstand global economic pressures.
Why it matters
Increased forex liquidity provides the central bank with more tools to stabilize the national currency against global market volatility.
Rupee began Thursday on a strong note, gaining 47 paise to 94.26 against US dollar in early trade, as record foreign-currency deposit mobilisation bolstered the country’s foreign-exchange liquidity.The currency opened at 94.30 at the interbank foreign exchange market before moving up to 94.26. It had closed at 94.73 on Wednesday, after gaining 22 paise.The strong move came after the Reserve Bank of India said foreign currency non-resident (Bank), or FCNR(B) deposits had brought in $127.226 billion as of August 31 under a special programme.Including overseas foreign-currency borrowings (OFCB) and external commercial borrowings (ECB), the measures attracted total inflows of $136.377 billion.Forex traders said that rupee was being supported by strong underlying inflows and aggressive intervention by the RBI, helping counter pressure from higher crude oil prices and global yields.Record FCNR(B) inflows strengthen RBI's handThe record mobilisation through FCNR(B) deposits has also raised the amount of liquidity that could enter the…
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